Australia: New ASX Capital Raising Listing Rules Finalised : 30 Jul 2012

Capital Markets Alert
Last Updated: 3 August 2012

By Michelle Eastwell, Partner

New ASX Listing Rules to facilitate capital raisings by mid to small cap listed entities will come into effect on 1 August 2012.

The new Listing Rules, which will be in place for this year's AGM season, enable mid to small caps to seek shareholder approval at their AGM to issue a further 10 percent of share capital over the following 12 month period, in addition to the 15 percent allowed in the current Listing Rules.

Here, partner Michelle Eastwell outlines the key changes to the Listing Rules, and explains some of the key issues listed companies need to be aware of when relying on these rules.

Key changes

The new capital raising Listing Rules:

  • apply to companies that have a market capitalisation of $300 million or less, and are outside the S&P/ASX 300;
  • permit an eligible company to obtain a 12 month shareholder mandate to issue a further 10 percent of its share capital (in addition to the 15 percent currently permitted by Listing Rule 7.1), at a maximum discount of 25 percent to the market price; and
  • provide that shareholder approval can only be obtained at the company's AGM by special resolution, with at least 75 percent of votes in favour of the resolution. Accordingly, eligible companies should now be considering whether it is appropriate to seek approval for this 12 month mandate at their upcoming AGMs.

Background to the changes

The ASX has, over the last year, sought to implement a number of initiatives to ensure the Australian market remains globally competitive, particular in the resources sector. These initiatives include introducing new capital raising Listing Rules, proposing faster rights issue timetables and trialling an equity research scheme.

With more than 1600 mid to small caps - more than half of which are in the resources sector - ASX has been particularly focused on addressing the needs of these companies to raise capital by placements. The changes recognise that mid to small caps rely heavily on placements as a critical source of capital, and that the existing Listing Rules often create time and cost inefficiencies, with the need to convene meetings outside of the AGM period and obtain shareholder approval before issuing securities exceeding the 15 percent capacity under Listing Rule 7.1.

The ASX issued a consultation paper in April 2012 and subsequently undertook industry consultation on the proposals. The new Listing Rules incorporate several changes from the feedback provided.

The new rules will be reviewed after two years.

Key elements of the new capital raising Listing Rules

  • The new Listing Rules will apply to companies that have a market capitalisation of $300 million or less, and are outside the S&P/ASX 300 at the time of obtaining shareholder approval under the new Listing Rules.
  • Eligible companies may seek shareholder approval to allow the issue of a further 10 percent of share capital over a 12 month period on a non pro-rata basis (ie by a placement). The approval must be obtained at the AGM and must be passed by a special resolution, with at least 75 percent of votes in favour of the resolution. The approval will lapse after 12 months or earlier if shareholders approve a significant transaction under Listing Rules 11.1.2 or 11.2.
  • There is an ability for shareholders of eligible companies to ratify securities issued in reliance on the new Listing Rules, which will have the effect of refreshing the placement capacity to the extent of the ratification.
  • The securities issued must be in an existing quoted class of equity securities of the eligible company.
  • The maximum discount on the securities is 25 percent to the market price. This is calculated by reference to the VWAP over the 15 trading days on which trades in the company's shares were recorded immediately before either:
    • the day on which the price of the securities is agreed; or
    • if the securities are not issued within five trading days of the day on which their price is agreed, the day on which the securities were issued.
  • When obtaining shareholder approval, companies must provide specific information to shareholders, including:
    • pricing and dilution information;
    • the purposes for which the equity securities may be issued, including whether they may be issued for non-cash consideration;
    • details of the allocation policy for issues under the approval; and
    • if this type of shareholder approval has been previously obtained, details of all share issues over the past 12 months, including, in the case of cash consideration, the amount of cash spent, what it was spent on and what the remaining cash is intended to be spent on.
  • Further disclosure must be made to the ASX and to the market generally when the securities are issued, including:
    • details of the dilution;
    • why the issue proceeded as a placement and not as (or in addition to) an issue which ordinary shareholders could participate in;
    • details of any underwriting arrangements; and
    • any other fees or costs incurred in connection with the issue.

It is important to note that these changes do not impact on the need to seek approval for related party transactions under the Listing Rules or the Corporations Act.

Changes to admission conditions

The ASX has also reviewed the Listing Rules relating to spread and net tangible asset requirements on admission, and has introduced changes that will be effective from 1 November 2012.

The net tangible asset requirement will be increased from $2 million to $3 million (rather than the $4 million requirement proposed in the initial ASX consultation paper). The spread requirements have also been amended to decrease the number of shareholders required to meet the existing spread requirements, and to introduce a new test of 300 holders where unrelated parties hold unrestricted shares equal to at least 50 percent of all shares on issue.

© HopgoodGanim Lawyers

Award-winning law firm HopgoodGanim offers commercially-focused advice, coupled with reliable and responsive service, to clients throughout Australia and across international borders.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.